Dark Wisdom (2 of 3): How Bad Design Triggers Perverse Behavior

This second column is part of a series of three posts about Dark Wisdom: How design manipulates the way we think, feel and behave. In this second post, we focus on Bad design.

The last post will focus on Good Design. The Dutch anthropologist and journalist Joris Luyendijk kept a blog and interviewed finance people in the City of London for more than two years for the Guardian. He wanted to find out how on earth this financial crisis could have happened. His conclusions (to be published in the upcoming book ‘How Can You Live with Yourself’) are terrifying. What he discovered was first of all that bankers are not evil as such. If it was only a matter of locking up the bad guys. What he discovered was that the financial world is a sick system that triggers risky, competitive and ultimately destructive behaviour. When you design a system in such a way that the awards are for the bank but the losses for the society, you basically provide a license for big gambling. This simple design triggered all kinds of perverse triggers, from the excessive bonuses for the winners, to the evil HR-system “Rank and Yank” that Enron introduced, in which the bottom-performing 10-20% of all employees get sacked every year. This, of course, triggered employees to engage in all kinds of manipulative bookkeeping in order to game the Yank and Rank system, which eventually led to one of the biggest bankruptcies in history. One of the Investment Bankers that Joris Luyendijk interviewed perfectly summarizes how the design of the system works.

Investment banking is a trap, a game and an addiction. The reward is big, but uncertain, which makes it exciting and keeps you coming back for more. Once the money starts flowing it’s very, very hard to take yourself away from it. Doing a deal is like scoring a goal, or maybe for journalists, getting a scoop. The game element is in the rivalry with other teams, winning the mandate, legging over the competition… Also, the emptiness that comes with addiction.

It’s not that difficult to understand that Luyendijk is very pessimistic about the future. The recent inflow of cheap money back into the financial system is basically fueling the old game back to unmatched levels, something Nobel Prize Laureate Joseph Stiglitz has been warning for since the early days of the crisis.

The problem is that it’s not just a design mistake in the fabric of our financial institutions. Bad design and perverse triggers are everywhere. Every belief system contains its own sets of triggers. Communism started as a good idea but eventually designed the biggest and deadliest oppression machinery in history in order to get people to obey the system. Liberalism once took off as a belief system that aimed at liberating the individual from the oppression of the big centralized ideologies like Catholicism, Communism and Nationalism. And for a brief amount of time, it provided some beneficiary effects. It made Francis Fukuyama write the famous essay ‘The End of History’, in which he proclaimed that history is now completed with the free individual as the final stage of historic progression.

Twenty years later we wake up in a world in which progress and value are only measured in economic terms. In which success means money (If you’re so smart, how come you’re not rich). In which not being successful means being a loser. In which managers reorganize every aspect of our lives to make it more profitable. And in which the biggest surveillance system ever imagined is tracking our actions, and analysing our behaviours for the sake of liberating us from any possible risk. To think of Liberalism as the end of history turned out to be a dangerously naive idea.

Every ideology first liberates us from the excesses from the previous ideology, but then inevitably installs its owns set of perverse triggers. This is what’s known as Shirky’s Principle:

Institutions will try to preserve the problem to which they are the solution.

The Dutch novelist Tommy Wieringa recently provided a brilliant insight in the mind of government officials in a lecture called The State as Pimp.

I translated it from the original Dutch transcript:

The Utopian in its full glory is nothing more than a dry bureaucrat who arranges both the landscape and the soul according to his preference. His ‘Fantasy Product’ demonstrates a remarkable lack of imagination as well as a surprise if not alarming- limited arsenal of themes … In his mind, the world looks like a chessboard, populated by pawns that move when and where he wants them to move. Nobody can escape this neurotic paternalism, which according to Kant is the worst form of despotism one can possibly imagine.

In order to organize our liberal utopia, we have started to measure everything. And once you start to measure everything, you start to organize the world in order to improve your metrics. And once you start thinking like that, you start to see people as the annoying things that fuck up your KPI’s. And before you know it, the manager thinks he’s more important than the working force or production force he’s managing. A miller needs to pay 400 EUR every year for an authorized mice exterminator because the government doesn’t trust the miller to keep his mill clean by himself. The hospital shuts down its psychiatric beds because these beds bring down the hospital performance score. The performance management system punishes the hospital for longer stays. A University decided to shut down most of its human science departments because they bring down the economic output metric of the University. This phenomenon is called Goodwin’s Law: every metric that becomes a KPI stops being a metric.

Let me repeat: bad design is far worse than evil design because it always takes a while before we learn to notice how the unwanted behaviour that follows from a badly designed system is actually triggered by the system.